Section 141 - Suretys right to benefit of creditors securities : Indian Contract Act
What is Suretys right to benefit of creditors securities? Section 141 of Indian Contract Act
Section 141 of Indian Contract Act 1872 : "Suretys right to
benefit of creditors securities"
141. A surety is entitled to the benefit of every security
which the creditor has against the principal debtor at the time
when the contract of suretyship is entered into, whether the
surety knows of the existence of such security or not; and, if
the creditor loses, or, without the consent of the surety, parts
with such security, the surety is discharged to the extent of
the value of the security.
(a) C advances to B, his tenant, 2,000 rupees on the guarantee
of A. C has also a further security for the 2,000 rupees by a
mortgage of B's furniture. C cancels the mortgage. B becomes
insolvent, and C sues A on his guarantee. A is discharged from
liability to the amount of the value of the furniture.
(b) C, a creditor, whose advance to B is secured by a decree,
receives also a guarantee for that advance from A. C afterwards
takes B's goods in execution under the decree, and then, without
the knowledge of A, withdraws the execution. A is discharged.
(c) A, as surety for B, makes a bond jointly with B to C, to
secure a loan from C to B. Afterwards, C obtains from B a
further security for the same debt. Subsequently, C gives up the
further security. A is not discharged.